GOVERNOR RELEASES “MAY REVISE”

During a press conference at the Capitol today, Governor Brown released his “May Revise” to the 2016-2017 proposed California State Budget. The Governor noted that the states “surging revenue” has slowed down recently, that debts are seven times larger than surpluses, and that he is prepared to “manage” the state if the Prop. 30 taxes are not extended, while noting how stable property taxes are (ed. “reliable”).

Rex Hime, President and CEO, California Business Properties Association, stated, “After an initial review of the budget and the Governor’s spending – and spending restraint – priorities seem appropriate and are keeping the state on a continued path of fiscal responsibility.”

Here is a statement from the Governor’s Press Office:

As revenues fall short of projections and California stretches into an eighth year of economic recovery, Governor Edmund G. Brown Jr. today released a revised state budget that funds core programs while paying down debt, saving money and holding the line on new obligations.

“The surging tide of revenue has begun to turn,” said Governor Brown. “Quoting Aesop’s fable of the ant and the grasshopper: ‘It is best to prepare for the days of necessity.'”

When Governor Brown took office, the state faced a massive $26.6 billion budget deficit and estimated annual shortfalls of roughly $20 billion. These deficits, built up over a decade, have now been eliminated by a combination of budget cuts, temporary taxes and the recovering economy.

Barring any significant changes, the budget over the next two years remains in balance. However, in the years that follow, the state’s commitments will exceed expected revenues with annual shortfalls forecasted to exceed $4 billion by 2019 – or worse with an economic slowdown or recession.

Several legislative leaders have already reacted to the release of the new budget:

Assembly Speaker Anthony Rendon (D-Paramount) released the following statement on the release of the May budget revision:

“The Assembly believes we must protect against future economic downturns so we can avoid potential cuts to schools and other critical programs, as well as tax increases on middle class Californians.

“The Governor’s budget revision makes clear that the rainy day fund first proposed by Assembly Democrats is doing its job and absorbing the ups and downs of revenue forecasts. That means we are able to make necessary improvements to the budget without impacting existing services or using one-time money for ongoing programs.

“In the coming weeks, the Assembly will work to craft a responsible budget that protects reserves and reflects the values of the people of California: fighting poverty, improving early education, expanding access to higher education, and making progress to increase affordable housing.”

Assemblyman Phil Ting (D-San Francisco), chair of the Assembly Budget Committee, released the following statement:

“California continues to have a responsible budget for a stronger middle class. As we continue to save money in our rainy day fund, education investments remain our top priority. Additionally, more Californians will move into the middle class with the raising of the minimum wage across the state.

“As we finalize our budget over the next month, we need to develop long term funding strategies for child care, pre-school, and higher education. Infrastructure and housing need investment to keep our people and economy moving forward. We must also continue to lead the fight against climate change.

“I look forward to working with Governor Brown and my colleagues in the Legislature to enact another on-time budget that broadens opportunity while responsibly saving for the future.”

“With revenue growth slowing and the potential for a recession looming, we must budget responsibly. The Governor is already projecting future budget deficits in excess of $4 billion. The problem will be much worse if the Legislature adopts the billions in new spending demanded by Democrats.

“Republicans stand with the Governor in his call for fiscal restraint. Saving for the future and addressing more than $200 billion of existing budgetary debts and unfunded liabilities is the right thing to do. New spending should be used for one-time critical needs that will help all Californians like water, school and transportation infrastructure.”

And from the Senate Republicans:

“Californians are counting on the Governor’s call for fiscal restraint to be more than a sound bite. Responsible budgeting that focuses on improving government effectiveness should be the clear choice for California. Senate Republicans are committed to a responsible budget, which means saving more for a rainy day, making California affordable, and fixing broken programs,” said Senate Republican Leader Jean Fuller (R-Bakersfield).

“We have more revenue now, but we may not sustain this amount in the future, which is why the Governor has wisely chosen to set aside money in the state’s Rainy Day Fund,” said Senator Jim Nielsen (R-Gerber), Vice Chair of the Senate Budget and Fiscal Committee.

At the weather in Sacramento heats up, so will the debates over spending priorities.

Click here to read the full budget summary of the “May Revision – 2015-16.”